I've got Photoshop, Flash, and Illustrator CS4 running on my TiBook (1Ghz G4, 512MB RAM, Radeon 9000 Mobility, OS X 10.4.11). No you can't run Photoshop with 250 layers adding filters at whim, but yes it does run.
If you are used to the speed hit you take from running on an older processor, and keep your design decisions with those limitations in mind, you'll be ok.
I've done quite a number of Photoshop projects for my graduate coursework on this machine and intend to keep doing so in the foreseeable future. Good luck!